A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

January 03, 2008

What do REALTORS actually do that justifies a $30,000 commission on a $500k home sale?

Especially considering that home sold for $200,000 a few years ago, and the REALTORS made $12,000 for I would imagine the same amount of work.Not a bad wage increase for the little lock box openers, considering wages in America are flat to declining. Good news though is that their wages will now be declining - along with home prices and transactions.

Goodbye REALTORS. The Big Scam is over. Take your six percent and stick it.

I am very happy that realtors will now be having to eat more noodles, soup and cupcakes.

Realtors sit around all day and when the phone rings, they show a house. They sell the house then make a half a years' salary.

It makes me so mad that I spent years and years in college; that I spent thousands of dollars on college and high school educated dummies are making tons of money and living a good life while I struggle.

I want realtors to pay.

I want them losing money and having diarrhea.

I want them to lose their hot, blonde chick girlfriends to me, so that I can have some beautiful lovin'.

I am full of rage as they laugh at us working class dummies and they get rich and we're broke and without hot babes.

what do realtors do that justifies a 30k commission? not much. they fill out paperwork that anyone can do. and if there is a lawsuit over the sale, they will be very hard to find and they will leave you hanging on a limb. so for all the talk about them providing you some kind of safety net, forget it. they do not. i am never going to ever use a realtor again. waste of money. piss on it. anyone can and should read all contracts before you sign. and anyone can do this. why do we need those idiots for anyway?

I share your anger and envy of the flashy life style of realtors driving BMWs and enjoying exotic vacations some with a new hot wife. Maybe I should join an anger management group? I want to believe that what goes around comes around or karma. I wish for both of us a hot right mate with a strong heart connection in 2008.

the trouble with realtorsi post on a alberta bubble blog site often. we were getting infested with a pestilence. realtors. it seems they hate being called real-tots as in tots let out to playreal-tots is a suitable name for ramen eating parasites

and to think, they have actual college courses and departments for real estate. talk about a waste of grey matter, studying real estate. well those days are over for sure now. they can go back to being sackers at the grocery store.

Congress will pass a massive FB aka Wall Street bailout and surround themselves with a phalanx of 100 children. Taxpayers will be paying the mortgages for any and all FB's so that the banks can collect on their bad loans. It will be done "for the children"

Anyone who opposes the bailout will be labeled as a "mean spirited" Nazi who wants to starve the children in the streets.

What the liberal useful idiots don't realize is that they are the power behind corporate facism.

I wouldn't have an issue with Realtors making what they make if I felt that it was something that they came by honestly.

Unfortunately, they inject themselves into every transaction through intense lobbying and their protected MLS system. They really end up being much like car salesmen and car dealerships (who also used lobbying to eliminate internet competition). The Realtors take it one step further by making you afraid to buy without them and putting out a bunch of dishonest press to inflate prices and overrate the investment value of someone's primary residence. The fact that they had to trademark "Realtor" is just an example of how goofy their whole existence is.

When I bought my first house, I was young. My realtor was a straight shooter and I didn't mind paying her and her office some cash for helping me with the whole process.

But now, if I were to buy or sell my house, I would do everything I could to avoid using a Realtor if only to help eliminate the stranglehold they have on the process. I am hoping that the internet will do to realtors what it did to travel agents and stock brokers.

There is a time and place to use middlemen -- when they add value to the transaction. Someday, I think the internet will eliminate all of the useless Realtors. Then, there will be a small group of real estate professionals who come in handy for people in special circumstances, who need a total turnkey move.

This is why I can't stand Dave Ramsey. Get out of debt, yeah yeah, good advice.

Then Dave Ramsey insists you should always use a realtor. What a huge steaming load of crap! Get out of debt? Is that what you advise DAVE? Thanks I got it! Now you and your realtor scum friends can take a hike. You are right. You are doing much better than you deserve skimming huge fees for doing very little.

you guys are morons! sure there are realators that fall into your descriptions but they are the non-professional variety- most pros DONT lie to their clients MOST do have a college education and MOST dont charge 6%- you all know NOTHING heres the deal- most listings in my area are done for 1-2% of that the lister spends half of that on marketing the property and then pays tax on the remainding .75-1 percent- if you sell your own listing you get 4% where the hell you all get this magical 6% # baffles me - yes in a perfect world the lister gets 3 and the buying agent gets 3 but you all forget that the BROKER takes a huge chunk of that. listen up morons i build houses (not any more) and a good agent is worth their weight in GOLD! they spend countless hours driving morons around showing houses to people that they never buy- whats YOUR time worth on an hourly basis? im sick of you know nothings bashing HONEST agents doing HONEST work.

go out and see how the world REALLY works before you cast stones! chances are you live in a VERY real glass house (pun intended)

It's entertaining to visit here from time to time and witness the self-importance and abject stupidity. As time passes and the housing recession deepens, posters here seem to become even more intoxicated by schadenfreude.

None of you has a clue as to how RE works. None of you even has an idea where the money goes in a RE transaction. If any of you nitwits saw the cost structure of an average Realtor's business, you'd wonder why anyone does it. And, don't even get me started on buyers and sellers who think nothing of breaching an agreement or otherwise screwing over people who've committed time, money and resources to helping them. Hey, us whores deserve it, right?

Worst of all, you fools don't even realize that it's Realtors who are going to clean up the mess we're in now. Short sales, REO, pre-foreclosure and bankrupt properties are piling up, and they're not going to price, market and sell themselves.

Rail against shoddy agents all you want, but when you paint all Realtors with the same broad brush of contempt, you simply reveal yourselves to be pea-brained Nazis.

Well do be fair that $30,000 is split $15K each for the buyer and seller agent. And that $15K is split between the agent and his/her office. So the agent himself only gets $7500 of the $3K commission.

And to be even more honest, last month I billed $14,000 to my client. What did I do do deserve that $14K? Mainly surfed the web, spent lots of time on HP. Goofed around with the guys at the office. Took 2 hour lunches. Oh and maybe did 20 hours of actual work.

Come on dude, if you started disecting everyone's income and tried to justify it, nobody is worth even 25% of their pay. Which is why India and China are taking away all our jobs. They get paid 25% of what we make, since that is all the value we actually give. That is unless you think me charging $100 an hour to surf the web is providing good value.

I know it's all nice to bash realtors. Fine bash away, I'm not one myself so I don't really give a shit. But look in the mirror a little yourselves and you'll see you're not all tha different. Unless you're something like an ER doctor saving people's lives, none of you are any more special than the 6% crew. In one way or another we're all hucksters, salesmen, liars. We look out for #1 and do whatever it takes to "close the deal".

I sold without a realtor, it was a marvelous experience. With the $50,000 we saved my wife and I bought gold and went to Hawaii (for a month).

It’s amazing to me how many realtors I met in Hawaii when we were there.

I remember when we were clueless newlyweds. We bought a place in a collapsing market (1991) with a realtor who deceived us about the market condition and values. She moved out of state as soon as she had our money but not before buying our newborn a teddy bear.

At least she kissed us after the screw.

I still have three friends who are realtors; they all lie to my face and would take my money in a heartbeat.

Realtors have expenses you guys don't appreciate: they have to split the commission, then fork over half again to the office or franchise they affiliate with. This pays for scenes of Realtors arriving in helicopters in the nick of time with closing papers to save the day. Then they have to pay NAR annual dues: this pays for us to know that if Suzanne says so, we can sleep easy at night while we entrap ourselves in drowning debt but at least our kids won't grow up stupid because the school district is awesome. And then there's the MLS fees, which they need to tell clients they participate in but then try to make your home listing an exclusive so they don't have to split the fee (see above).

Then there's the stuff right in front of you but didn't notice: there's a monthly lease on that Beammer SUV to drive around in. This is required to show they're a 'Million Dollar Producer', (see award plaque over their monthly rental desk at the franchise, received at a lunch ceremony at Pizzeria Uno along with a gift certificate to a day spa). So don't try to negotiate the commission fee down / don't make lowball offers to counter an inflated asking price.

Finally there's the wardrobe: ties with a big Gucci insignia for the fellows; a loud, snappy scarf worn thrown over the shoulders for the gals, along with a huge pocket book through which she needs to dig through throughout ALL conversations with clients to find the cell phone (which is blaring snazzy ring tones every 5 minutes). This ensures clients know they're in demand so they shouldn't mind when the Realtor interrupts dinner, homework help or any other off-hour activity. These calls are usually in regard A) informing a potential client how much he/she could get in this hot market - because prices may be falling elsewhere but not in THIS neighborhood, as it's different here and all markets are local or B)badgering the seller into lowering the asking price they promised was reasonable within 7 days of the seller signing the sales contract.

SO HPer's, do you get it yet? After all those expenses, there's very little left over to pay for all those Botox treatments, required to look your best when you're a Realtor and ready for your close up while taking on Peter Schiff.

Keith - With all due respect, if a used house salesman can sell your house for $500,000 when the underlying value is $230,000, it is worth the $30,000 commission. Problem being, now that order is being restored to the market, 6% is obscene.

"With all due respect, if a used house salesman can sell your house for $500,000 when the underlying value is $230,000, it is worth the $30,000 commission."

Um, don't REALTORS, who are "real estate professionals who have been chosen to join the National Association and abide by the strict Code of Ethics", have a 'duty to clients and customers' to (Article 2): 'refrain from exaggeration, misrepresentation or concealment of facts pertinent to property or transactions'?

Haw Haw!! Hey, here's an idea for you Keith: check out the "REALTORS Pledge of Performance and Service", do a list of the '17 Articles of Duty' and let us HP'ers take a survey to see how many of those services were actually practiced during their own REALTOR experience. You can check out the official document by Googling 'realtor.org code of ethics' (PS: love the pretentious, generic Staples stationary product and fancy typeface).

None of you has a clue as to how RE works. None of you even has an idea where the money goes in a RE transaction. If any of you nitwits saw the cost structure of an average Realtor's business, you'd wonder why anyone does it.

I call B.S. My gf worked in a r.e. firm for over a year (as admin, not a realtor), and in that time I hung out there a lot during the day and we also got to know a lot of the realtors and became friends, went out with them on weekends, etc etc. This was in 2006 and several of them were making well into the six figures.

I hate to break it to you but from that experience I learned they really don't do much at all. Yes there is paperwork and such but it's not that complicated (no more than the average salesperson's in any industry) and in most cases the firm's admin people do all of that anyway. This is the case in just about any r.e. firm.

My experience in that year is that the realtors "work" around 20-30 hours a week and go out drinking almost every night of the week, then come into the office around 10 am the next day hungover.

And this was at one of the more "respected" firms.

So, you can keep your B.S. story that realtors "work hard" and actually deserve 6%.

None of you even has an idea where the money goes in a RE transaction.

The BMW salesman, the bartender, restaurants, coke dealer, etc.

Reality Check: 6% is over! Realtors are going the way of travel agents. You're being replaced by technology and the internet. People don't need you anymore. Just read the stories of people who sold without realtors and how happy they are.

I frequently work with realtors. They are for the most part uneducated, greedy, dishonest and superficial. There are some exceptions but they are few and far between. Most can't pull comps for shit and have no clue what a property is worth. You aren't considered a "successful" agent unless you drive around in a German or Japanese luxury car. You will be hard pressed to find a realtor that does any market research other than on RMLS and the NAR releases. They did not see the bubble coming and were totally unprepared. I don't know of a single one with any meaningful savings. All of their hard earned (lol) money is gone, spent one-upping each other. Fortunately, they are now dropping like flies into the abyss of low wage hourly employment. I for one enjoy watching them working "normal" jobs and unable to look down upon the rest of us from behind their designer sunglasses.

Who pays 6% these days? I paid my guy 4% when I sold last year. That worked out to $22,000 of which he got 25% and the buyer's realtor got 75%. I hated paying but I tried selling FSBO for 4 months and got he grand total of 1 person to look at the house. It was a necessary evil to use a realtor but it was that or not sell.

I don't know what he did, if anything, but I sold my house pretty quickly. Could have been coincidence, could have been dumb luck, I dunno. In the end it was worth $22,000 since the value of the house has dropped at least $75,000 since then.

You are incorrect in your fee schedule for realtors, and you assume a very high average sales price. Have more integrity with your website when you pose such a biased question.

6% = 3% going to a BUYING AGENT and 3% going to a SELLING AGENT that have TWO TOTALLY SEPARATE JOBS.

So for your example, 3% of $500,000 WOULD BE $15K; NOT $30K. Of $15k, roughly $4-5k goes to the realty company (i.e. Remax, etc.). So $10k goes to the selling or buying agent. Take out realtor fees (mls fees, continuing education fees, advertising expenses, car/gas,) and they might have a whopping $5k from that sale. Are they supposed to work for free? Don’t be stupid.

Furthermore, $500,000 is not a common transaction in most parts of the country.

An average here in Tampa is $220,000. So 3% of $220k is $6,600 and after split with Remax and expenses that is $2,200 to the realtor and then pay taxes on that.

If you think all realtors made soooo much money then why did you not go out and stake your claim and make sooo much easy money?

Good Realtors spend 10% of their time showing houses and doing paperwork, and 90% of their time marketing for business. The last 5 years were not indicative of what the business is like. It was too easy just to sit on the phone and take orders.

The purge has started in earnest -- I e-mail market to Realtors and one office with 200 agents lost 52 in the last 3 weeks. I imagine at least half of the people in Real Estate will be gone by spring.

1. I've done my own three last transactions w/o a Realtwhore - and yeah, I did save myself a pile of dough. I *might* have been willing to pay someone about $500 to take care of running around paperwork, but not a cent more. I was quite pleased to have a member of the bar handle my contract, for under a grand a pop; by that I mean: someone with a real professional degree.

2. I know whereof I speak because I used to work for a Board of RE. I was the guy that made their MLS software run.

You can blather on all you like about how ignorant bubbleheads are - but I can tell you for damn sure: these otherwise unqualified to do much of anything outside the typing pool Realtwhores wouldn't be doing it if it wasn't quite profitable.

Most of them are 'professionals' from some other field which didn't pay squat and they wanted a low-barrier-to-entry second career to make a fast buck.

Of course, the few who remain through this shakeout will really be working for their money - they'll actually have to hustle a bit.

If a buyer or seller is too fuzzy on reading the contract, then they should hire a real legal professional - one with some real liability - like a lawyer - to read the fine print before they sign.

The point is, most people do not need realtors at all. Why not sell your own house? Why not buy your own house? All it will take is an online marketplace and a change in people's attitudes. The only time you really need a realtor is if you move out of town before you can sell your house. On an average $200K house, you would save $12K.

Saying we don't need realtors is all fine and good. But in reality you do need one if you buy a house.

I don't NEED a car salesman but if I want a new car, I will have to deal with a car salesman.

Just like I can't call up Honda and order a car from the factory, in the vast majority of cases I can't buy a house from someone without using a realtor. The system is set up in such a way that it isn't done except in rare circumstances.

Realtors are NOT worthless if you have the right one (and no, I am not a realtor)! When I bought my first house in '99, my realtor was instrumental in negotiating a final purchase price which was MUCH lower than the asking price AND lower than the competing bid. How did she do that? By subtly chatting up the seller's agent and figuring out that the seller needed to close sooner, rather than later. (Fast cash needed for a pending tax bill!) A good agent is an able negotiator and haggler, and this is a skillset. Negotiation is a skill that many Americans do not have. People are brainwashed into thinking that the sticker price is the only price, and they do not attempt to haggle prices down. (How many people do you know who dread the entire car buying process because of the haggling involved?)

However, I know a few people who thought their realtors were worthless because they didn't have the gumption to push for a low offer or counteroffer and the buyers themselves had to push the realtors into making the appropriate offers/counteroffers.

If I were to buy a house in today's market, I would not need a realtor to haggle for me, because experience has taught me what I need to know to make a good deal for myself. However, I would want a realtor to do the grunt work of finding houses for me to view - my personal time has immense value to me. But is my hypothetical realtor's time worth 3% of a $800K - $1M house? No, because there are no specialized skills involved in showing houses to potential buyers if you're a buyer's agent. (Different story if you a seller's agent, but that's another topic altogether.)

Let's summarize things this way - is it worthwhile to pay $10K to a realtor who shows you 4-5 different houses on weekends for a couple of months? NO. Is it worthwhile to pay someone $10K to negotiate a deal that saves you $30K off the asking price or off the best deal that you could come up with on your own? YES.

I don't NEED a car salesman but if I want a new car, I will have to deal with a car salesman.

Why do we need a new car salesman? Why not just get a price then go for a test drive instead of haggling for hours? Once again, there is a layer of inefficiency. All the information you need about the car is on the internet. That's how I bought my last two cars. The salesman was useless to me. They could have just had a clerk help me sign on the dotted line and not have to pay commission

Just because you have a college education doesn't mean sh*t. If my garbageman has a college degree, should I pay him more to pick up trash?!? College is bullshit and not REALLY required for most jobs in America. Of course, most college educated sheeple are too stupid or scared or greedy to stand up and speak a simple truth.

Come on dude, if you started disecting everyone's income and tried to justify it, nobody is worth even 25% of their pay..... In one way or another we're all hucksters, salesmen, liars. We look out for #1 and do whatever it takes to "close the deal".

True, but does that make it right? Do you think an economy this inefficient has ANY chance of competing globally. We're all hucksters, I couldn't agree more.

Why do we need a new car salesman? Why not just get a price then go for a test drive instead of haggling for hours? Once again, there is a layer of inefficiency. All the information you need about the car is on the internet. That's how I bought my last two cars. The salesman was useless to me. They could have just had a clerk help me sign on the dotted line and not have to pay commission

January 04, 2008 3:19 PM

-------------------

True. But when you go to the dealer you are still paying a salesman a commission. That is the way the system works.

A realtor worked for me and sold my house.Lucky or not, here is how it happened.

tried selling house with one, delisted, tried F.S.B.O., then listed with a different realtor.

The 2nd realtor had a walk through with about 15 other realtors.Well one of the realtors who toured through my house was in school (night classes), and found the perfect fit for our house.Sold it, thanks to a realtor.

B REAL NOW! IN SUPPORT OF MOST REALTORS I HAVE MET:if a realtor like say Ms Connie Degroot, FOX news featured realtwhore on youtube sells a Beverly Hills mansion for say 2 million she gets to split 6 % of sales price with the other agent then pay her broker. She still makes a insane amount of cash for 1 deal!On the other end your average SoCal home sold for say 475K in the peak bubble days 6 percent is what 25K so 12,500 plus pay there broker so they walk with what 7k but then they pay tax because there an independent contractor which leaves them with say 5,500-6,000 but then they factor out of that marketing fees mls listing fees ect now what 5,000 left? OK HP'ers now HOW MANY OF THESE TRANSACTIONS FOR ABOUT 5 GRAND DO THEY CLOSE IN A YEAR? I have talked to many realtors and they average about 4 a year. So a whopping 20K a year average which is why most of them did it on the side. Not to prop them up but this is the reality of most of them. Blame HGTV more for promoting realtors as an easy money get rich BLING BLING thing.I dont know about SCOTTSDALE but I really know SAN DIEGOFlippers and long term holders made the most easy money, like myself bought in Oceanside, CA in 1999 for a place to live BASED ON MY INCOME as a graphic designer 4500/mo then, a conventional 30 yr fixed a 1500/mo mortgage. I then sold in 2005 after reading HP for the profit and because my hood was getting taken over by immigrants and grafitti. I was approached constantly in 04 by hungary realtors soliciting me to sell (many driving hondas/ toyotas not hummers/escalades) being that there was 12 comparable homes in my zipcode on the market at the time. They really werent making a ton of quick cash because THE COMPETITION WAS SO GREAT SOO MANY REALTORS just like soo many non talented DOT COM jobs were created. THE SHEEPLE THOUGHT IT WAS EASY MONEY. Anyways I finally was approached by the original realtor who sold it to me and I basically threw him a bone and he raked in more money then I would have thought I could get. I first listed FSBO got lookiloos then he listed it higher and sold within 2 weeks with multiple offers.Now summer 2007 I recently got tired of renting with roomates and hoarding all the loot and paid 75K CASH of coarse for a 1800 sq ft 3 bed 2 bath mobile home across the street from the beach in a awesome beachcity in the OC the only downer is 1400/mo space rent but a studio apt around here costs more and it was free housing loot anyways. Interest even covers it! Oh and I have at least 75K 100% equity in it..thanks Mr Realtor, Mr Housing Bubble and HP for making me see the obvious

Not sure how anyone can buy a house without involving a realtor, or why anyone really has a problem with it.

If you have the down payment, the required, documented income to get the 15/30 year fixed, and the resources to locate the affordable properties, then the realtor will have no real impact on the transaction as far as the buyer is concerned. If you don't have the above, you've got no business even looking around.

Decide what you are going to offer then let the agent take it to the seller. If you let an agent advise you on an offer then that's your problem. If they refuse to take the offer to the seller they represent move on, because what choice do you have?

Supply and demand always dictates who has the hammer in business. If a potential buyer relinquishes the advantage they will have in a down market, whatever the market is, then they deserve whatever they get.